How to Spot Common Real Estate Scams

With the current real estate market as hot as it’s been the past couple of years, it’s no wonder real estate scams are on the rise.  In 2021, the FBI’s Internet Crime Complaint Center reported almost 12,000 victims of rental or real estate fraud, which resulted in losses of over $350 million.  To keep yourself from being included in these statistics, below are five common scams to look out for when buying and/or selling real estate.    

Fake Owners – Scammers frequently list properties for sale that they don’t own, attempting to lure potential buyers.  The purported seller/owner may then ask for a deposit to “hold” the property until you’ve had a chance to come see it.  In general, you should always be suspicious of someone who asks for a deposit up front.  Additionally, prior to signing a contract, always ask the purported seller/owner of the property to provide a copy of the real estate tax records and current deed.  When it comes time to make an earnest money deposit, it’s best to use a trusted third party, such as a closing attorney.  Your attorney should uncover any title issues.

Fake Real Estate Professionals – Similar to lying about owning a property, there are scammers posing as real estate agents online.  If you’re approached by someone who alleges he or she is  an agent and offers his or her  services, verify that the person has a valid real estate license in South Carolina (or the state where the property is located) by checking the board of realtors website.  You want to be sure the person guiding you through the buying or selling process has been properly trained to do so and is familiar with the rules and regulations in your area.  

Cash Offers – We’ve all seen the signs and ads: “We pay cash for homes” and “We buy ugly houses.”  The concern here is selling your home for far less than market value.  If you call one of these companies, you will likely be asked whether you own your home outright or what the balance is on your mortgage; they’re trying to determine how much you stand to pocket if you sold your home.  The company will use this amount to offer you as little as possible.  They’ll make the low-ball offer enticing by offering a quick closing.  While owners facing hardships and time constraints may ultimately decide to go with this option, you will typically make more on the sale by selling to a “traditional” buyer.

Predatory Lending – Mortgage lenders make money each time a borrower obtains a mortgage.  Some unsavory lenders will try to persuade homeowners to refinance their mortgage over and over again, often suggesting the homeowner borrow more money each time so they can “cash out” to have money on-hand.  This is predatory lending.  If you’ve recently refinanced your home, it’s probably not in your best interest to refinance again right away, unless mortgage rates have significantly dropped.  A lender telling you otherwise may not be looking out for your best interests.  Also be on the lookout for lenders who are actively reaching out to you when you have not requested their help.

Bait-and-Switch Moving Companies – One moving scam works like this: The moving company has you outline your belongings, and they provide you with an estimate for say $5,000.00.  The company then shows up to start loading your things and tells you it will actually be $10,000.00 now that they’ve seen what you have.  By this point, people are usually in a bind and have to be out of the home, so they’re forced to agree to the price increase.  Another scam is even scarier: The company loads up all of your belongings but then refuses to unload/deliver them unless you agree to pay more.  You can protect yourself by: (1) asking the moving company for a license number and checking to see if any complaints have been filed with the Federal Motor Carrier Safety Administration; (2) checking the Better Business Bureau for complaints; (3) getting quotes from several companies; and (4) not paying in full until the job is actually completed.

While the majority of real estate transactions occur without incident, it’s always best to be cautious when dealing with buyers, sellers, lenders and moving companies.  With every player, there’s the potential for scam.  

if you need help with a real estate transaction, please contact Bellamy

Law Firm to set up a consultation.